“WHY??” Entrepreneurs Sell Their Businesses

“Pursue one great decisive aim with force and determination” – Carl von Clausewitz

I remember selling my first home and having the realtor say to me “Selling your home will be the most important and stressful transaction you will ever undertake”. While this may ring true for most people, selling a house is a “walk in the park” compared to selling your business especially a family business. Selling a company is hands down the most important, complex and stressful financial transaction the majority of entrepreneurs will ever do. The sale of your business is bound to result in many sleepless nights. Your years of blood, sweat and tears all come down to an eventual exit which is inevitable no matter how you do it.

I know what you are thinking…. Why would any sane, logical person put themselves through the emotional roller coaster of long hours, stress, and nail biting inherent in selling a company? In our many decades of collective Business Broker experience we have identified many reasons entrepreneurs sell and exit their companies: (e.g.- retirement, illness forcing sale, financial pressure, divorce, death, boredom, shareholder disputes, the urge to pursue other interests/ dreams in life, new business opportunities, unsolicited offers, etc.). As you can see there is no shortage of good reasons to sell a privately owned company. The most important question to ask yourself if you are contemplating a sale is WHY?? And you must be brutally honest!! Past experience has also taught us that if the only reason to sell is for money, than you are NOT truly ready.

The question of WHY?!? and the reasoning behind it, is of the utmost importance and will undoubtedly surface over and over again before, during, and after the sale of a business. In fact, Business Brokers and M&A professionals such as myself like to refer to this as the “ First and the Last Question” made by buyers. If a seller doesn’t answer this question with sincerity from the beginning, it may cause a buyer/investor to become suspicious of everything that they are told or think that they are not 100 percent motivated to sell. Buyers will then decide to immediately move on and allocate their time on a deal that is much more probable of getting done. Knowing the real reason for a sale is also critical to the sale process for yourself and the professionals representing you. From a professional standpoint, it is almost impossible to achieve a seller’s objectives during and after the sale if we are kept in the dark.

Last but not least. Knowing WHY will also be very important when the dust settles from a sale or exit. When you are no longer a business owner or the head honcho, justification of WHY will bring much more piece of mind. A successful sale and exit for the right reasons can provide a complete sense of accomplishment for an entrepreneur as well as create financial freedom for the whole family for many years to come. A sale and exit when an owner is not truly ready can also leave them feeling like they have no purpose, unfulfilled and remorseful that they left. The latter of the two scenarios is not where ANY entrepreneur should be once they monetize their hard work. Do yourself, your family, and the professionals you entrust to sell your business a huge favor. Ask yourself WHY and be SOLD on that reason…It is very important!!